Is deflation truly that bad for an economy?

[dinofelis]

But isn't hoarding investing in oneself directly opposite to a total basket?

"investing" for me, means "buying capital goods", means of production.  So if you hoard, you do not buy capital goods. You do not buy machines with the aim to produce.  If you were USING your own money to buy machines for a production you're planning, then you would indeed be investing in yourself, and "gamble" that you are a better business than a business out there in which you could have invested.

Do both create the same economic environment regardless of inflation/deflation? or is your logic simply based on two negatives ?

I'm assuming steady state, and long term constant money velocity, which means that the economic growth is constant, that inflation or deflation is constant.  Now, if the velocity of money is constant, it also means that the aggregate demand for "store of value" is constant: that people "hoard" always the same amount.  

So your hoarding is not ADDITIONAL to other hoarding: we consider that the total amount of hoarding is already stabilized.  As such, if you hoard more, the hypothesis is that some else hoards less, because we assume steady state.

So the difference between both ("investing in the total basket" and "hoarding") would simply come down to a different constant value of the velocity of money.  If people hoard more, the velocity is lower.  If people "invest more" the velocity would be somewhat higher.

You could also see it differently: if people hoard more, it is as if the total amount of money is smaller.  And if people invest more, it is as if the total amount of money were higher.  But as long as people do, on average, the SAME thing, that amount won't CHANGE.

Of course, in a deflationary model, you can assume that it is more interesting to hoard than in an inflationary model.  So the amount of hoarding will probably be higher in a deflationary model than in an inflationary model.  But once things have stabilized (that is, once the amount of hoarding has adapted to the amount of inflation or deflation), and once hence the velocity of money has adapted, there is no difference in fact between both.

Of course, on the short term, there will be fluctuations.  There will be short term changes in inflation and deflation, there will be short term changes in hoarding versus investing, there will be short term fluctuations in economic growth.

We're trying to look at the long term picture to see the long term influences of these elements, and for that, it is better to assume the simplistic steady state as a basis to start from.  Because the claim "inflation is good"  or "deflation is a disaster" is a general statement, which, if true, would be easily demonstrated in steady state models.  It doesn't.  In fact, economy is largely indifferent to it.

So we have essentially 2 models we look at:

A) inflationary model:
inflation = 2%
velocity = 3  (people don't hoard much)
real interest = 4%
economic growth = 4%

B) deflationary model:
inflation = -2%
velocity = 2 (see, the average hoarding is higher here)
real interest = 4%
economic growth = 4%

(note that in model B, we are not in "fixed supply" because the economic growth is still above the deflation rate, so there is still money creation, but less so than in A)

Of course, in B, prices will be 30% lower than in A because of the lower velocity.

A transition from A to B might be a scary ride !  But in steady state A or in steady state B, economically, things are essentially equivalent (except for the financial sector who lost all the "hoarders").

[Erdogan]

I think this explanation is good, and I hope I don't jump in too early (for the other people in the discussion), with some effects of this.

Assuming, as denofelis explained, that for the economy at large, there is no difference, we can still draw some interesting conclusions:

In a deflationary environment, people would have larger savings in money. That means, it would be easier for everyone to buy a big ticket item out of cash, thus feeling richer, and in fact being richer. Of course, everyone can not do it at the same time, else the savings will go down and the balance is off.

In a deflationary environment, there will not be that large redistribution of value from the general public to the banks (really the bank persons) via the interest on loans.

The transitions between deflationary and inflationary environment is important to the short sighted politicians. The transition to a inflationary environment is good for the politicians. Therefore there is small hope achieving deflation with voting. On the other hand, going further in the direction of inflation, thus enforcing the current system, is possible.

[thaaanos]

What worries me in this assesment is the assumption of steady growth.
The steady state in the deflationary model may be a dynamically unstable state, and at the first shock revert to a more stable dynamic but with negative growth.
What you say is that lower money velocity is counterbalanced only by the prices. but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

[twiifm]

They get reserves from Central Bank not money.  Your view of finance is incredibly simplistic.  I dont think you know how that industry functions

Of course, but that is sufficient.  The reserves and the imposed fractional ratio determine how much money a bank can create.  You should maybe read the first chapters of the Treatise on Money by Keynes again ?

Simply said, if I'm bank A, and you're bank B, we can write loans to each other as much as we like, and those loans become created money.  If there's no legal limit, two banks can create an infinite amount of money, by lending to each other.  The reason being that the "debt certificate" that bank A holds of bank B, is considered an asset of bank A, and the "debt certificate" that bank B holds of bank A, is considered an asset of bank B.  As such, by lending themselves, say, each, $ 100 000.- they have created two times $100 000.- of assets one another.  Their balances are in check: they have each an "asset" (the other bank's debt) of $ 100 000.-, and they have each a debt of $ 100 000.- (as a bank account they opened for the other bank with $100 000.- on it).  They can even ask interest.  There's a cash flow due, and there's a cash flow coming in.

Now that they have their balances in check, and they have money (that is, the bank account in the other bank with $100 000 on it), they can lend it out to, say, someone needing a mortgage.  They then ask that person 3% interest on it.  If bank A lends out its freshly created $100 000,- to Joe, who wants to buy a house, by writing him a cheque on the other banks' account and then Joe has to give them $ 3000.- a year.

So on Monday, Bank A didn't have a dime.  On Tuesday, Banks A and B do their money-creating swap.  On Wednesday, bank A loans its money to Joe.  Now, bank A has an income of $3000.- a year.  Its balance is still in check.  It has no dime, but it has a debt to bank B of $ 100 000.- and it has a mortgage contract worth $100 000.- with Joe.  Its balance is in check.
Bank B will do the same.

On Thursday, the directors of bank A and B meet in a bar, and decide to start over next Monday....
As such, they generate each an income of about $ 3000.,- a week, as long as they find mortgage customers...

They can do the same with a mutual loan of $ 1000 000.- or even $ 1000 000 000.- or ....
But in reality, they can't because there's a legal limit: their reserves.  It was Keynes' (correct) argument to require a reserve and a reserve ratio by law, to avoid the "runaway" of banks creating money.

Suppose that the reserve ratio is 5%, and bank A and bank B manage to have $ 1000 000.- each as a reserve deposit.  That means that they can now play that game until they have about $ 20 000 000.- of customer bank accounts (of the other bank, say ;-) ) and lending out $ 20 000 000.-

They cannot "go party" with $ 20 000 000.- because they have to have their balances in check.  It is not that they can SPEND that money. But they can LOAN that money, and invest it and they don't need a high return on it.  If their reserve COSTS them, say, 1%, and they can obtain even 0.5% on the $ 20 000 000.- they work with, then they make sheer benefit even though they invest badly.

Indeed, the 1% on their reserve costs them only $ 10 000, and the 0.5% on the $ 20 000 000 brings them $100 0000 !

So IF you can obtain reserves, you can create money.  And if you can create money, you obtain the interest on it "for free".  You cannot spend the money itself, but you can spend the interest, which you do get for free.

When banks get into problems is when they screw up so badly that they LOSE money, and that they loose their $ 20 000 000.-

The trick of "pumping money" with banks is to use the reserve fraction ratio as a leverage on the interest: if you get $ 1000.- more reserves, you can play with 20 000 or so.  So you only need to generate a return on those 20 000 that is 20 times smaller than the cost of your 1000 in order to break even.  If you become greedy, and you start doing risky things with those 20 000, then you might be very rich, or you might be in deep shit if it goes wrong.  

This so wrong on so many levels..  You just dont understand banking

[Robert Paulson]

deflation is the whole purpose of the economy.
when we manage to improve production supply rises and prices go down and so everyone can buy more things.
companies are still making the same amount of money because the higher sales volume makes up for the lower price and so wages stay the same.

what the government is doing today has nothing to do with improving economics, they need inflation to inflate their debts away.

they don't care that they are ruining the capital structure of the economy, wasting resources on bad investments and ruining production for everyone causing real prices to rise.

[Erdogan]

What worries me in this assesment is the assumption of steady growth.
The steady state in the deflationary model may be a dynamically unstable state, and at the first shock revert to a more stable dynamic but with negative growth.
What you say is that lower money velocity is counterbalanced only by the prices. but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

To explore some concepts, it is often useful to keep other things static, or in this case, steady.

Economic growth is essentially unmeasurable, but we can easily approximate it by looking at the volume of consumer goods available, or even better, the value (but since value is also fundamentally unmeasurable, that introduces more uncertainty).

Growth is not given. It can be negative, as nature can disrupt the production, kill off lots of people in a pandemic, and humans can start wars (which kills soldiers that could be workers, consume capital that could otherwise be used in production, in addition to the direct distruction of capital and consumer goods). Nature can also randomly increase production, for instance a rift can expose new sources of metals.

The most important parameters for growth is the population, and the savings rate. That is because the savings is the source of investments. Direct investment contra investment through lending, it does not matter, because if someone takes up a loan to invest, the money has to come from someone else who saved and lent out. With investments come productivity, note that economic freedom is necessary, confiscation through taxes and planned investments never leads to optimal capital use. Central planning reduces wealth relative to what could be achieved in the free market, and central planning can also reduce wealth absolutely, that is, produce negative growth, as we see happening before our eyes in Venezuela. There is also the cultural tendency to save, that first started in europe. If there is no saving in some community, prosperity can never occur. Then there is the willingness to take risks in investments, which can be hampered for a generation after a socialistic implosion, like we see in Russia.

In the days of Adam Smith, the natural growth under peace would amount to about a doubling of wealth per generation.

It is necessary to underscore that increase in wealth is not the same as increase in consumption of natural resources or destruction of pristine nature. We are talking about value, which is subjective and decided by each individual as preference for one thing over another. We can easily see that in the products that have a high value but need only a small amount of material to make.

Eventually. wealth will expose itself as longer life, healthy life, freedom, the opportunity to explore the world and yourself and make a satisfying life, for everybody.

[dinofelis]

This so wrong on so many levels..  You just dont understand banking

There are simplifications, but I essentially write the first few chapters of Keynes' Treatise on Money.  So maybe he didn't understand banking either.

[dinofelis]

What worries me in this assesment is the assumption of steady growth.

Because the only way to have continuous mild deflation with fixed supply is when there is steady growth of course.
In other words, if there is no economic growth, and there is a steady supply of money, then there is no reason to assume there will be deflation either (at least in the long term - short term fluctuations in the velocity of money - that is in the demand of store of value in money - can always induce temporary inflation or deflation).

What you say is that lower money velocity is counterbalanced only by the prices.

Yes, because prices are set in markets.  Prices are the response variable, always.  Prices that are set freely in markets are never "a priori" variables. 

but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

If they lower production, prices will rise.

[dinofelis]

What worries me in this assesment is the assumption of steady growth.
The steady state in the deflationary model may be a dynamically unstable state, and at the first shock revert to a more stable dynamic but with negative growth.
What you say is that lower money velocity is counterbalanced only by the prices. but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

To explore some concepts, it is often useful to keep other things static, or in this case, steady.

Economic growth is essentially unmeasurable, but we can easily approximate it by looking at the volume of consumer goods available, or even better, the value (but since value is also fundamentally unmeasurable, that introduces more uncertainty).

Growth is not given. It can be negative, as nature can disrupt the production, kill off lots of people in a pandemic, and humans can start wars (which kills soldiers that could be workers, consume capital that could otherwise be used in production, in addition to the direct distruction of capital and consumer goods). Nature can also randomly increase production, for instance a rift can expose new sources of metals.

The most important parameters for growth is the population, and the savings rate. That is because the savings is the source of investments. Direct investment contra investment through lending, it does not matter, because if someone takes up a loan to invest, the money has to come from someone else who saved and lent out. With investments come productivity, note that economic freedom is necessary, confiscation through taxes and planned investments never leads to optimal capital use. Central planning reduces wealth relative to what could be achieved in the free market, and central planning can also reduce wealth absolutely, that is, produce negative growth, as we see happening before our eyes in Venezuela. There is also the cultural tendency to save, that first started in europe. If there is no saving in some community, prosperity can never occur. Then there is the willingness to take risks in investments, which can be hampered for a generation after a socialistic implosion, like we see in Russia.

In the days of Adam Smith, the natural growth under peace would amount to about a doubling of wealth per generation.

It is necessary to underscore that increase in wealth is not the same as increase in consumption of natural resources or destruction of pristine nature. We are talking about value, which is subjective and decided by each individual as preference for one thing over another. We can easily see that in the products that have a high value but need only a small amount of material to make.

Eventually. wealth will expose itself as longer life, healthy life, freedom, the opportunity to explore the world and yourself and make a satisfying life, for everybody.

Amen !

[twiifm]

This so wrong on so many levels..  You just dont understand banking

There are simplifications, but I essentially write the first few chapters of Keynes' Treatise on Money.  So maybe he didn't understand banking either.

Not modern banking. 

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

[thaaanos]

What worries me in this assesment is the assumption of steady growth.
The steady state in the deflationary model may be a dynamically unstable state, and at the first shock revert to a more stable dynamic but with negative growth.
What you say is that lower money velocity is counterbalanced only by the prices. but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

The most important parameters for growth is the population, and the savings rate. That is because the savings is the source of investments. Direct investment contra investment through lending, it does not matter, because if someone takes up a loan to invest, the money has to come from someone else who saved and lent out. With investments come productivity, note that economic freedom is necessary, confiscation through taxes and planned investments never leads to optimal capital use. Central planning reduces wealth relative to what could be achieved in the free market, and central planning can also reduce wealth absolutely, that is, produce negative growth, as we see happening before our eyes in Venezuela. There is also the cultural tendency to save, that first started in europe. If there is no saving in some community, prosperity can never occur. Then there is the willingness to take risks in investments, which can be hampered for a generation after a socialistic implosion, like we see in Russia.

So you agree that unemployment and hoarding has adverse effects on growth?

Trully free market pays a price of anarchy that is larger than the price of stability of Trully central planing. The reality however is that other factors like Privilege dominate the economic parameters in both cases. A computerized planning may be the endgame as we will be forced to seek higher market efficienies

[thaaanos]

What worries me in this assesment is the assumption of steady growth.

Because the only way to have continuous mild deflation with fixed supply is when there is steady growth of course.
In other words, if there is no economic growth, and there is a steady supply of money, then there is no reason to assume there will be deflation either (at least in the long term - short term fluctuations in the velocity of money - that is in the demand of store of value in money - can always induce temporary inflation or deflation).

What you say is that lower money velocity is counterbalanced only by the prices.

Yes, because prices are set in markets.  Prices are the response variable, always.  Prices that are set freely in markets are never "a priori" variables. 

but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

If they lower production, prices will rise.

In a dynamic system response variables become also input variables because of feedback. Experience in greece shows that removing money supply sees price increase, and negative growth, high unemployment. Even if this is an equilibrium its not one you would like to be in.

[thaaanos]

This so wrong on so many levels..  You just dont understand banking

There are simplifications, but I essentially write the first few chapters of Keynes' Treatise on Money.  So maybe he didn't understand banking either.

Not modern banking. 

http://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

"...There is not a uiversal agreement on what money is. ..."
So Economics are kinda like Theology . Some would argue though that it is Theology

[Erdogan]

What worries me in this assesment is the assumption of steady growth.
The steady state in the deflationary model may be a dynamically unstable state, and at the first shock revert to a more stable dynamic but with negative growth.
What you say is that lower money velocity is counterbalanced only by the prices. but there is no guarrantie them economy will choose this path you may well witness price increases as producers factor in and shift over to customers various risks, and lower output instead that translates to unemployment and eventually a demographic readjustment, either by social exclusion or immigration

The most important parameters for growth is the population, and the savings rate. That is because the savings is the source of investments. Direct investment contra investment through lending, it does not matter, because if someone takes up a loan to invest, the money has to come from someone else who saved and lent out. With investments come productivity, note that economic freedom is necessary, confiscation through taxes and planned investments never leads to optimal capital use. Central planning reduces wealth relative to what could be achieved in the free market, and central planning can also reduce wealth absolutely, that is, produce negative growth, as we see happening before our eyes in Venezuela. There is also the cultural tendency to save, that first started in europe. If there is no saving in some community, prosperity can never occur. Then there is the willingness to take risks in investments, which can be hampered for a generation after a socialistic implosion, like we see in Russia.

So you agree that unemployment and hoarding has adverse effects on growth?

Trully free market pays a price of anarchy that is larger than the price of stability of Trully central planing. The reality however is that other factors like Privilege dominate the economic parameters in both cases. A computerized planning may be the endgame as we will be forced to seek higher market efficienies

No. Unemployment is not the result of the free market, it is solely a result of red tape to disallow work, and government intrusion into markets. With free markets, it is just as easy to sell your work (get a job) as it is to sell tomatoes, that is, you get a better price for a better product, but you will be able to sell it all. Young people of today may not believe this, but it has been the case in the past. That is how students could travel, split your summer vacation in two, work in one half, travel in the other. There was never a question of how to find work. This was around here (unspecified) in the seventies.

We don't want artificial stability.  We want organic, continuous change to adapt to nature and the preferences of the people in the market. We don't want to adapt to the highflying ideas of the elite, we want freedom. That is also what creates the most value, and that is by definition. If someone decides for you, you get less value, according to you.

Hoarding is not negative. Hoarding is the result of speculation on part of one individual that some ware will be more scarce and valuable in the future.  Hoarding makes sure that the stuff is available at the time of need, distributed to those in most want of it through the higher price. Hoarding of money is specially not negative, neither in the now or in the future, because it means that the hoarder in fact consumes less in the now, making goods, including investment goods,  available for a lower price to others in the now.

I wonder how you could come to infer these things. Hoarding (of things with intrinsic value) is investment. If there is negative growth in an environment with sound money and free markets, I want that, because that is the result of the individual preferences. Everyone has to decide how to split is time between work and other activities. If there is a swing toward leasure in the aggregate, negative growth will ensue, so what?

[deisik]

Hoarding is not negative. Hoarding is the result of speculation on part of one individual that some ware will be more scarce and valuable in the future.  Hoarding makes sure that the stuff is available at the time of need, distributed to those in most want of it through the higher price. Hoarding of money is specially not negative, neither in the now or in the future, because it means that the hoarder in fact consumes less in the now, making goods, including investment goods,  available for a lower price to others in the now.

Hoarding postpones consumption. This, taken by itself, isn't good, is it? Then you come to say that hoarding is akin to speculation, i.e. you hoard something so that you could sell it later at a higher price to those who most want it. That I can't understand, since it is you, the hoarder, who contributes greatly to this need in the first place by stashing something away...

[Erdogan]

Hoarding is not negative. Hoarding is the result of speculation on part of one individual that some ware will be more scarce and valuable in the future.  Hoarding makes sure that the stuff is available at the time of need, distributed to those in most want of it through the higher price. Hoarding of money is specially not negative, neither in the now or in the future, because it means that the hoarder in fact consumes less in the now, making goods, including investment goods,  available for a lower price to others in the now.

Hoarding postpones consumption. This, taken by itself, isn't good, is it? Then you come to say that hoarding is akin to speculation, i.e. you hoard something so that you could sell it later at a higher price to those who most want it. That I can't understand, since it is you, the hoarder, who contributes greatly to this need in the first place by stashing something away...

You are confused, probably by the negative connotations of the words speculation and hoarding. So let me use other words.

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

[deisik]

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

I don't think that by this you can create value. Actually, you create deficit and profit by this later...

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

[Erdogan]

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

I don't think that by this you can create value. Actually, you create deficit and profit by this later...

Because the stuff is more valueable in the future. The value in the future must of course match the cost, the interest and the risk - standard investment accounting.

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

In that case I would not produce it. That is the point. The consumers decide, and you need to consume to live, so something will always need to be produced. Why is this a problem?

[twiifm]

Hoarding is not negative. Hoarding is the result of speculation on part of one individual that some ware will be more scarce and valuable in the future.  Hoarding makes sure that the stuff is available at the time of need, distributed to those in most want of it through the higher price. Hoarding of money is specially not negative, neither in the now or in the future, because it means that the hoarder in fact consumes less in the now, making goods, including investment goods,  available for a lower price to others in the now.

Hoarding postpones consumption. This, taken by itself, isn't good, is it? Then you come to say that hoarding is akin to speculation, i.e. you hoard something so that you could sell it later at a higher price to those who most want it. That I can't understand, since it is you, the hoarder, who contributes greatly to this need in the first place by stashing something away...

You are confused, probably by the negative connotations of the words speculation and hoarding. So let me use other words.

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Hoarding (savings) & investment are 2 different things.

WRT Investments your capital is at use.  Yes it could be good or bad investments but doesn't matter, the capital is being used

WRT Savings, the capital is just sitting there, frozen.  Might was well consider it not part of economy

[twiifm]

No. Unemployment is not the result of the free market, it is solely a result of red tape to disallow work, and government intrusion into markets. With free markets, it is just as easy to sell your work (get a job) as it is to sell tomatoes, that is, you get a better price for a better product, but you will be able to sell it all. Young people of today may not believe this, but it has been the case in the past. That is how students could travel, split your summer vacation in two, work in one half, travel in the other. There was never a question of how to find work. This was around here (unspecified) in the seventies.

There is nothing systemically different between now & 70's.  Same govt, same Central Bank.  If there is a different economic state, then it has nothing to do with the system.  Has to do with other forces